With all of the top 25 credit unions except Westminster reporting their 2018 results, it is timely to look at the market share winners and losers and the strategies that drove exceptional results.
This table shows the December 2018 share of provincial banks and credit unions and the 12 and 60 months % changes in share presented in order of 12 month share growth.
- Connect First had the largest share growth at 20.9% driven mainly by the merger with Mountain View Credit Union.
- While mergers had some impact on Alterna share growth, organic growth was the major driver for each of the next for credit unions, all from Ontario.
- Coast Capital grew more in the last 12 months than the previous 4 years combined.
- Blue Shore has been a consistent top performer growing share 6.2% in 2018 and 39.1%over 5 years.
- 8 of the top 25 credit unions lost share to banks and other credit unions in 2018Drivers of Share Growth:
- Mergers remain a factor driving growth for some credit unions. The number of CreditUnions and Caisses Populaire declined 8.1% in 2018 with the largest declines in Alberta18.2%, Ontario – 17.7%, Manitoba – 12.5% and Quebec 7.5%.
- Segment Focus is the main driver behind Blue Shore growth. Their focus on the affluentmarket is reflected in their location choices, branch designs and their financial planningcapabilities.
- Distribution expansion is a major factor driving growth of Alterna Credit Union – AlternaBank and Meridian Credit Union – 24 new branches in past 5 years. Meridian has also just launched a national direct bank – motusbank and Coast Capital is expected to follow soon. While the direct space is a cost-efficient way to reach beyond local markets, bricks and mortar remains a key buyer purchase criterion when consumers select their financial institution.
- Broker Channel Participation: The mortgage and deposit broker channels are the most effective way to build share of customers beyond your member base. While margins are slim and cross-selling opportunities limited, participation in these channels remains popular among some of the faster growing credit unions.
- Pricing: Mortgage pricing is vastly different across banks and credit unions. The share growth leaders price aggressively and transparently. High Rate Savings pricing also varies widely across banks and credit unions. The direct players lead the market with rates ranging from 2.25% – 2.80%. Many credit unions price HRSA’s slightly above banks. Most banks and credit unions have opted to improve margins on their HRSA’s willing to give up share for profitability.
- Specialist Sales Forces: Mobile Mortgage Specialists, Financial Planners and Mutual Fund sales forces have proved effective at driving share through growing share of wallet among members and attracting new members.